Quarterly report pursuant to Section 13 or 15(d)


3 Months Ended
Mar. 31, 2018
Notes to Financial Statements  

2016 Equity Incentive Plan


In the first quarter of 2016, the Company adopted the 2016 Equity Incentive Plan. The following table contains information about the 2016 Equity Incentive Plan as of March 31, 2018:





for Issuance







for Grant

2016 Equity Incentive Plan     30,000,000       1,977,732       28,022,268  


Stock Options


The following table summarizes the Company’s stock option activity and related information for the three months ended March 31, 2018:



Number of







Per Share


Weighted-Average Remaining Contractual





Value of

In-the-Money Options

Options Outstanding as of Janury 1, 2018     1,177,732     $ 2.17            
Options Granted     800,000     $ 4.41            
Options Exercised     -     $ -            
Options Forfeited     -     $ -            
Options Expired     -     $ -            
Options Outstanding as of March 31, 2018     1,977,732     $ 3.08     9.1 Years   $ 522,600  
Options Exercisable as of March 31, 2018     659,774     $ 2.20     8.5 Years   $ 391,950  


The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price of $2.52 on March 31, 2018 and the exercise price of options, multiplied by the number of options. As of March 31, 2018, there was $4,239,445 total unrecognized stock-based compensation. Such costs are expected to be recognized over a weighted-average period of approximately 1.98 years.


The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. The following assumptions were used to calculate stock-based compensation for issuances during the period ended March 31, 2018. There were no stock options issued during the period ended March 31, 2017.


    March 31,  
Expected Term (years)   6.5 Years  
Volatility   127.9-128.0 %
Risk-Free Interest Rate   2.5-2.7 %
Dividend Yield     0 %


The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Hence, the Company uses the “simplified method” described in Staff Accounting Bulletin 107 to estimate the expected term of share option grants.


The expected stock price volatility assumption was determined by examining the historical volatilities for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Company’s common stock becomes available.


The risk-free interest rate assumption is based on the U.S. treasury instruments whose term was consistent with the expected term of the Company’s stock options.


The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Accordingly, the Company has assumed no dividend yield for purposes of estimating the fair value of the Company stock-based compensation.


The Company estimates the forfeiture rate at the time of grant and revisions, if necessary, were estimated based on management’s expectation through industry knowledge and historical data.


Stock-Based Compensation Expense


The following table sets forth the total stock-based compensation expense resulting from stock options and restricted grants of common stock to employees, directors and non-employee consultants in the consolidated statement of operations which are included in selling, general and administrative expenses:


    For the Three Months Ended  
    March 31, 2018     March 31, 2017  
Type of Award  

Number of

Shares or



    Stock-Based Compensation Expense    

Number of

Shares or



    Stock-Based Compensation Expense  
Stock Options     800,000     $ 474,198       -     $ 47,589  
Stock Grants:                                
Employees (Common Stock)     81,506       288,450       6,667       26,100  
Employees (Series B Preferred Stock)     -       -       40,000       1,035,406  
Directors (Common Stock)     -       -       8,333       37,500  
Non–Employee Consultants (Common Stock)     6,410       16,692       31,176       145,011  
Total Stock–Based Compensation Expense           $ 779,340             $ 1,291,606